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Strong medicine for your business
What you’ll learn in this guide:
One of the most frustrating aspects for many healthcare professionals is the time it takes to receive payment on invoices. Financing invoices with insurance companies, medical vendors, and service providers can complicate medical billing practices, restrict cash flow, hinder finances, and stunt growth.
Add in the intricacies of each company’s unique billing requirements, government regulations, and Medicaid/medicare receivables standards, and it’s little wonder invoices can take months to be paid. Too many payment delays can leave healthcare providers struggling to make ends meet. Invoice factoring loans for small businesses can help provide consistent cash flow and cover cash flow gaps.
Big and small health-related businesses can benefit from medical invoice factoring, also called medical receivables factoring or just medical factoring.
U.S hospitals have some of the highest operating costs of any industry, a whopping $1,112,207,387,000, in 2020¹, and that doesn’t consider smaller providers and clinics. Unfortunately, one of the biggest challenges for most healthcare companies is the time it takes for invoices to be paid, often between 90 and 120 days.
Medical invoice factoring, also called medical factoring, or medical receivables factoring turns invoices from third-party payers (Medicare/Medicaid, HMOs, private insurance companies, workman’s comp. insurances, etc.), into immediate capital. Home health care, hospitals, eye doctors, dentists, and other health-related industries can benefit from medical invoice factoring.
Factor refers to the purchase of accounts receivables at a discount from a provider’s billed charges by a factor company. The money that is disbursed to the medical facility as payment for the accounts receivables/invoices by the factor company is called an “advance.”
Generally, there are two types of medical factoring:
Although medical factoring and healthcare invoice factoring are often used interchangeably, they are different.
Medical Factoring addresses the needs of physicians, dentists, eye doctors, medical specialists, etc., who provide direct care to patients but risk cash flow issues from slow-paying third-party payers. These payers might include Medicare and Medicaid, the government, HOMs/PPOs, and private insurance carriers.
Healthcare invoice factoring provides funding to small commercial vendors and service providers that provide goods and services to the medical industry. This might include medical staffing agencies, medical supply companies, IT companies, transcription services, and medical coding companies.
FundThrough provides unlimited working capital based on the size of your outstanding customer invoices. Transactions are automated, and payment is prompt. It’s a straightforward process.
The amount advanced varies based on the amount of the claims and the size of the medical facility.
Medical invoice factoring can be used by any healthcare provider that works with private insurers or government insurance programs. Companies may include:
Healthcare factoring is also for vendors that rely on payments from healthcare providers, including:
One of the biggest challenges in the healthcare industry is controlling cash flow because invoices from insurance companies are often paid at a snail’s pace. Very few claims are paid quickly.
Payroll, equipment, and operating expenses still must be paid on time. And most healthcare businesses—especially those growing quickly—can’t wait for Medicare, Medicaid, or private insurance companies to pay.
On top of that, medical factoring with FundThrough also solves these problems:
Self Care Catalysts (SCC) partnered with FundThrough to accelerate its cash flow, making it possible for SCC to pay various fixed costs and keep up with their billion-dollar healthcare clients. SCC clients include pharmaceutical manufacturers, hospital systems, academic institutions, and clinical research organizations.
Besides the problems that medical invoice factoring solves, the advantages are just too critical for your business to ignore.
Qualifying for medical factoring with FundThrough can be easier than qualifying for a loan. Plus, it doesn’t rely on your credit score. But, you may need to meet certain requirements.
Fortunately, when your small business is growing fast, but cash flow is tight, FundThrough offers the best factoring solution to fit your funding needs.
Source: 1. American Hospital Association (AHA) https://www.aha.org/system/files/media/file/2020/01/2020-aha-hospital-fast-facts-new-Jan-2020.pdf
Your questions answered.
When you factor an invoice, you are essentially selling your unpaid invoices to a factoring company—FundThrough. In return, you receive an advance, which allows you access to working capital. The remaining balance is paid to you when FundThrough receives payment from your customer.
Factoring, also called invoice factoring, is when a domestic company receives an advance, usually 80%, against unpaid short-term accounts receivables.
Forfeiting is a type of international trade financing. It deals primarily with medium- to long-term accounts receivables and is a financing option used by exporters to receive 100% financing based on exported goods’ value.
No, medical invoice factoring is not a loan. It is instead an advance on your unpaid accounts receivables. Your credit does not matter, and your credit score will not be impacted when you factor invoices.